(October 26, 2010) Industry wants carte blanche use of taxpayers’ funds, writes Patricia Adams in the Financial Post.
Some Canadian mining companies “consider Bill C-300 serious enough that they would contemplate relocating their head offices elsewhere if this comes into law,” said Anthony Andrews, executive director of the Prospectors and Developers Association of Canada.
The bill could threaten Canada’s status as a world leader in global mining finance, said Mac Penney, director of government relations with Kinross Gold Corp., one of Canada’s largest gold mining companies.
Bill C-300 “would mean the cancelling of projects and the cutting of jobs…. Many Canadian companies would simply not take the risk of pursuing new ventures in developing countries,” stated Perrin Beatty, former secretary of state for external affairs and now president and chief executive of the Canadian Chamber of Commerce.
“If passed, Bill C-300 will undermine the competitive position of Canadian companies. It could cause an exodus of mining companies from Canada,” warned Michael Bourassa, a partner and co-ordinator of the global mining group in the law firm of Fasken, Martineau DuMoulin, named “Global Mining Law Firm of the Year” for five straight years by Who’s Who Legal.
These and numerous other captains of Canadian industry all came to Ottawa over the last year to deliver one message: Without taxpayer support for mining projects in the Third World— what Bill C-300 is ultimately about — Canada’s mining industry would be unable to compete and could leave Canada.
Bill C-300, a private member’s bill that’s up for third reading today, is designed to give those affected by Canadian-backed mining projects in the Third World — both the Canadian taxpayers providing the funds and the Third World citizens hosting the mines — a say in projects accused of harming the environment or human rights. Under this bill, either the Minister of Foreign Affairs or the Minister of International Trade would be obliged to receive and investigate allegations of wrongdoing. If the allegations were borne out, the mining company would lose its taxpayer support, most of which comes from Export Development Canada, a Crown corporation that annually provides the mining industry with more than $20-billion in subsidized finance and insurance.
Companies willing to operate on a free-market basis would be exempt from penalty — Bill C-300 targets only those companies unwilling or unable to operate without government support.
Critics of Bill C-300 argue that Canadian miners would be targeted unfairly, that the Canadian economy would suffer, and that the Third World would be deprived of desperately needed development. The critics are wrong on all counts.
First, there’s nothing unfair about taxpayers wanting a say in how their funds are spent. What’s unfair is a mining industry that wants carte blanche use of taxpayers’ funds. EDC is able to exempt even the riskiest of its projects from environmental assessments, and from the normal disclosure requirements in the Access to Information Act.
Taxpayers typically have no right to meaningful details associated with any EDC disbursement to any mining company or mining project. Next, the notion that the Canadian economy benefits by subsidizing an industry has no currency, except with socialist true-believers. Governments are notoriously poor at picking winners.
Now let’s examine the third claim from the critics, that the Third World would be deprived of needed development. This claim largely refers to projects in corrupt or lawless countries whose leaders tend to misuse funds intended for development, and which mining companies would steer clear of without government backing.
Take Africa, for example, the most corrupt region on earth. EDC, touting itself as willing to insure mining companies in the event that an African regime expropriates their property, tears up contracts, or otherwise reneges on deals, makes deals happen between Canadian companies and regimes that neither protect the environment nor the rights of their own citizens. With EDC’s backing, mine shareholders can breathe easy when they invest in such countries, confident that if a politically risky project fails, Canadian taxpayers will come to their rescue.
Without EDC and other Canadian government backing, Third World development would indeed be affected — for the better. Canada’s mining companies and their financiers would now avoid projects with corrupt regimes in favour of countries that respected the rule of law — where the mining firms need not fear the unlawful expropriation of their assets, for example. This would create true development — jobs and wealth in nations that have the preconditions necessary for development.
Most of the criticisms of Bill C-300 stem from fears that the regulations that would be written to implement it might be unfair to mining companies. The critics have no basis for prejudging as-yet unwritten regulations. In any case, the regulations would in all likelihood be irrelevant if Canadian companies swore off taxpayer subsidies. Companies that need taxpayer largesse to remain in business should at least have the decency to grant their benefactors an accounting of their actions.
Read the original article in the Financial Post.
Categories: By Probe International